Education Sector Report: AG briefing

Meeting report

The start of the meeting was delayed due to the late-arrival of several Members of the Committee and the Chairperson apologised for the late start, but requested that the delegation from the office of the Auditor-General of South Africa (AGSA) continue with their presentation nonetheless. She stressed that the AGSA was a critical institution in conducting effective oversight over all government departments, therefore ensuring good governance. Furthermore, considering the Education Sector Report tabled in November 2016, the Chairperson stated that there was a need for the Committee to have a broader engagement with the AGSA on the report.

Briefing by the AGSA on the 2015/16 Education Sector Report

Mr Barry Wheeler, Corporate Executive: Auditing, AGSA, thanked the Chairperson and noted that every few years, the AGSA produces a sector report to provide a holistic picture of the South African education environment. The 2015/16 report highlighted the root causes of “why things are the way they are” in the education sector. Many of these problem areas pertained to the way in which planning was done, the level of research, as well as the limited number of adequately feasibility studies conducted. An underlying feature of these issues was that the appropriate policies and procedures in the sector are not being complied with. It was unclear as to whether this non-compliance was deliberate or as a result of the processes not being adequately known.

In terms of infrastructure development, Mr Wheeler stated that one of the fundamental issues was the extent of monitoring and review, as well as delays in the completion of projects. Departmental oversight in the procurement, quality and compliance of infrastructure projects was imperative, but the actual performance was found to be lacking. Mr Wheeler highlighted the massive backlog in the provision of school buildings in South Africa, and stated that in cases where basic education fails to deliver, “a child is robbed of reaching his or her potential”.

The 2015/16 report identified considerable capacity problems in terms of staff vacancies and a lack of skills within the education sector. The report recognised the limited budget and the severe resource backlog at the Department of Basic Education (DBE). The findings of the AGSA report should assist the Department in improving sectoral efficiency, providing for better service delivery and the review and monitoring of key areas.

Mr Godfrey Diale, Senior Manager, AGSA, said around R10 billion is spent every year on infrastructure for basic education. Provincial infrastructure grants are managed centrally from the Department of Rural Development and Land Reform (DRDLR). The AGSA report based its analysis on demand management and project management in the development of education infrastructure. In terms of demand management, the AGSA report found that an appropriate project brief was not developed for projects in the Eastern Cape, Limpopo and North West provinces. Moreover, infrastructure needs were not correctly identified and prioritised for projects in the Free State, Limpopo and North West provinces.

In terms of project management, the AGSA report found that project elements were not coordinated to allow for completion within the agreed timeframes and budget for projects in the Eastern Cape, Free State, Gauteng and Kwazulu-Natal provinces. Project coordination was a major challenge considering the magnitude and lack of planning in education infrastructure. Moreover, the report found that the collection, storage and distribution of project information were not properly planned for projects in the Eastern Cape, Free State, Mpumalanga, North West and Northern Cape provinces. Lastly, the AGSA report found that contractors did not produce quality work for projects in the Eastern Cape, Gauteng, Kwazulu-Natal, Mpumalanga and Northern Cape provinces. In many instances implementing agents would not properly document progress; therefore project planning was informal, inconsistent and often based on word-of-mouth reports. In this regard, he stressed the need for competent individuals within the Department of Education to oversee project development on-site and ensure that funds were not wasted on sub-standard infrastructure. Some of the AGSA report findings were identified by the Department during the audit process and the relevant contractors were reprimanded. Other contractors had been paid in advance without quality assurances.

In terms of the Accelerated School Infrastructure Delivery Initiative (ASIDI) programme, Mr Diale stated that the AGSA report had limited its audit to only the Eastern Cape, Free State, Kwazulu-Natal, Limpopo, Mpumalanga and North West. The AGSA needed to properly identify risks and allocate spending and it was considered impractical to audit all provinces. In all provinces considered, the AGSA report highlighted poor quality of construction work as well as a lack of coordination. In some cases, contractors have undergone liquidation mid-project, compounding the existing infrastructure backlog. Instances of poor utilisation of new or upgraded schools were highlighted in the Eastern Cape, Kwazulu-Natal, Mpumalanga and North West provinces. The report also found that routine maintenance of infrastructure was not planned for in the Free State, Limpopo and Mpumalanga.

In terms of the maintenance of education infrastructure, the AGSA report found that the provincial departments of the Eastern Cape, Limpopo and North West provinces did not have an approved policy in place to address the routine maintenance of school infrastructure. In practice, if there are no policies in place to address maintenance, there is usually no budget allocated for this purpose. Furthermore, the AGSA report found that routine maintenance was not planned for in the Eastern Cape, Free State, Limpopo and Northern Cape. Funds that were earmarked for infrastructure maintenance were being redirected to other areas and this was a common problem among all provinces.

In terms of Learner-Teacher Support Materials (LTSM), Mr Diale noted that the scope of the AGSA report had focused on Section 21 and non-Section 21 schools. Within the sample data, the AGSA report discovered that many schools had ordered excessive textbook stock, while other schools were severely undersupplied. The hoarding of LTSM items presented a serious problem to the education sector, considering around R5 billion is spent per year on the provision of textbooks, and that figure was growing. The issue was not specific to individual provinces, but mostly to specific school districts. At many schools within the sample, textbooks were ordered with little consideration of the quantity requirements or the existing resources. The AGSA report found that there were no LTSM committees at schools in the Free State and Western Cape provinces, while no LTSM procurement and distribution plan was evident in the Eastern Cape, Limpopo and North West.

The Department had developed a catalogue quoting the correct prices for textbooks, however many schools still chose to procure textbooks through alternative suppliers at inflated prices. The procurement process was neither fair nor transparent in many schools identified in the sample data. To this extent, the AGSA report found that some LTSM committee members did not disclose their relationships with suppliers of textbooks. These findings did not necessarily imply corruption, but certainly deviation from the correct processes. He reiterated the severe governance issues that needed to be addressed in the education sector.

Mr Eugene de Haan, Senior Manager, AGSA, said the AGSA’s sample for the audit of school finances was selected according to the South African Schools Act (SASA). Public schools were expected to submit their audited financial statements within six months of the end of the financial year to the head of the provincial education department, as per SASA requirements. In terms of the AGSA report findings, he stated that schools in the Free State, Gauteng, Kwazulu-Natal, North West and Western Cape were not able to submit their audited financial statements within the prescribed period. Even more concerning was the finding that a sample of schools in the Eastern Cape, Free State, Limpopo and North West provinces did not have audited financial statements for both the 2013 and 2014 financial years.

The report also found that a sample of schools in Kwazulu-Natal, Limpopo and North West did not use auditors registered under Section 43 of SASA in consecutive financial years. If these financial statements are not audited by a professional registered in terms of SASA, the credibility of the information submitted to the provincial departments comes into question. If there was abuse of funds at these particular schools, the provincial departments would not be able to identify this through the school’s financial statements. The current practice of monitoring was largely ineffective and inaccurate and there is very little planning in terms of improving performance. It should be the collective responsibility of schools, districts and provincial departments to ensure that the outcomes of financial statements are monitored effectively.

Ms A Janse van Rensburg, Senior Manager, AGSA, said the performance audit in terms of education district curriculum support and monitoring pertained to four areas: policies, enabling resources, training and supervision, and provincial and national-level monitoring. The scope of the audit included DBE, as well as 9 provinces, 23 districts and 105 schools in 2016. DBE’s policy on education districts was issued without a comprehensive feasibility study. The policy had set out specific norms and would be difficult to roll-back considering that different provinces are currently in different stages of implementation. According to the policy, every district should be responsible for 5-10 district circuits, with a national average of 25 schools per circuit. Kwazulu-Natal, Limpopo and Mpumalanga had averages considerably higher than the national norm of 25 schools per circuit. Gauteng had implemented a different ‘school cluster’ model ad in many cases, school districts were not optimally organised to fulfill what DBE’s dictates.

Districts could not provide effective support to schools as there was an uneven allocation of curriculum resources. The transport budget for curriculum officials to visit schools was found to be inadequate in most provinces. These curriculum officials seldom travelled altogether to cut costs – a problem attributable to a lack of coordination at district level. In terms of vacancies, Ms Janse van Rensburg stated that reallocating staff members to ensure that significant vacancies were compensated for presents a major challenge. She noted that curriculum advisor visits were largely inconsistent, partially attributable to the issue of vacancies. According to the AGSA report, seven districts had curriculum advisor vacancies between 10% and 20%, while five districts had vacancies in excess of 20%.

Contrary to the logic that more visits from subject advisors would yield better learner performance, the AGSA report found that these visits had little impact on learner performance. For example, there were no visits by subject advisors to secondary schools in the Limpopo province throughout the year in the schools analysed by the AGSA report. These subject advisors did little in identifying students with disabilities and special needs. The timeframe of visits may impact on the effectiveness of these subject advisors considering that many of these officials visited schools after the first semester, as opposed to at the beginning of the school year. The report also found that subject advisors did little to assist teachers in terms of remedial action. In all provinces, the AGSA report found that management information was not readily available in order to effectively gauge performance against annual targets. The performance agreements did not make mention of ‘effective curriculum support’ in terms of what needs to be done by teachers. Moreover, subject advisors did not formally monitor and follow-up on the progress of schools and educators in implementing their recommendations.

Ms Janse van Rensburg noted that provincial departments had highlighted districts that required additional support. The AGSA report could not establish a clear correlation to the extent that these schools highlighted were performing better. The report found that in all provinces, the performance indicators and targets in the strategic plans were inadequate in measuring the districts’ performance on curriculum support. There was no alignment in performance targets between the different levels of strategies imposed by the provincial departments. Reporting and documentation on a provincial level was inadequate, making it difficult to assess the impact of curriculum monitoring and support.

In terms of implementation of IT and E-education, Mr de Haan stated that the AGSA report looked at four specific areas for general controls, namely IT governance, Security Management, User-Access Management and IT Service Continuity. The AGSA report found that basic IT security and user-access policies and procedures were not adequately implemented, despite these security policies being drafted. Only the Western Cape and Limpopo provinces had established sufficient disaster recovery plans (continuity plans). The report found that the lack of IT skills and capacity remains a key problem in the implementation of IT programmes.

Many provincial departments had not been driving the strategy considering it was still a White Paper document. Certain provincial departments – including the Eastern Cape, Northern Cape, North West and Limpopo were not prioritising E-education due to budgetary constraints. The AGSA report found that the Western Cape, Free State and Gauteng provinces had made significant progress in driving the implementation of E-education, and were “well ahead” of the other provinces, while the Northern Cape, Limpopo and North West provinces had not implemented anything.

Dr Takalani Rambau, Senior Manager, AGSA, said that in terms of Teacher Professional Development, the audit had been undertaken over three years to establish what provinces were doing in terms of professional development. The report analysed the targets set in terms of training and found that most provinces had planned for around 9000 teachers to be trained, while the actual figure nationally reflected professional development of 200 000. This was indicative of the paperwork being done for “claiming purposes”, including 30-minute briefing sessions that were claimed to be professional development, whether it was actually training or otherwise. In 2015/16 the AGSA had looked at the needs-assessments of teachers, the functionality of teacher-development institutes, monitoring and support, and evaluating teacher development. The AGSA found that most training was conducted on a top-down basis where the provincial departments had identified teacher needs. School development support committees were not doing what they were supposed to do in terms of identifying teacher needs on a bottom-up basis.

In terms of annual teacher Personal Development Plans (PDPs), the AGSA found that PDPs were conducted only for the purpose of compliance and not for the purpose of identifying genuine training needs on a bottom-up basis. In terms of monitoring and evaluation of professional development, little was being done to determine whether training exercises were effective and information management and record-keeping were virtually non-existent. In the current self-input system, he continued, it was difficult to prove the validity of training exercises. The AGSA report found only three well-functioning development institutes in the Gauteng, Western Cape and Limpopo provinces, however the institute in Limpopo had a poor record-management system. The other six provinces were still developing their processes.

In terms of skills development, the AGSA report identified shortcomings in terms of record-keeping and how provinces benefitted from skills-development. Monitoring and evaluation remained a challenge, considering the risk of investing funds into individuals that will likely become unemployed. With this considered, he expressed his concern as to whether the interventions in terms of skills development were actually helping people to jobs in the sector. In terms of demand management, needs assessment was crucial in evaluating skills development programmes. Research on professional development was seldom uploaded into a national repository for South African colleges and universities to assess the standards of research.

The AGSA had assessed the infrastructure development progress at three Technical and Vocational Education and Training (TVET) colleges, namely Bhambana and Nkandla in Kwazulu-Natal, and Thabazimbi in Limpopo. The AGSA found that feasibility studies were not conducted at these facilities, and that there was a lack of proper site supervision during the construction process. This resulted in poor workmanship and inflated costs at these facilities.

Discussion:

Ms L Dlamini (ANC, Mpumalanga) welcomed the presentations, noting that they were highly informative. She requested to know the sample size of the AGSA’s report, as well as how the AGSA came to conclusions on a provincial level with the sample size considered. She raised concerns at the lack of supervision and expertise in project management in the development of infrastructure. Who is supposed to have this expertise? Is it the Department of Public Works, the implementing agent or DBE? She wanted to know whether the performance audit data was taken into account in the final audit outcome. Where does this information go? With reference to the key findings of the ASIDI programme, she asked why three provinces were excluded from the analysis. A report compiled by a NGO had produced a report with findings in conflict with the AGSA’s findings, specifically regarding the performance of schools in the Western Cape. She asked what the AGSA recommended going forward in terms of the Services Sector Education and Training Authority (SETA) and whether the problems arising in infrastructure development could be attributed to poor government planning.

Mr C Hattingh (DA, North West) stated that this was the first time he had been exposed to this style of reporting from the AGSA. How does the AGSA determine its areas of focus? Is the current criterion relevant as a priority for DBE? Will the AGSA continue to utilise this criteria in the future? He inquired about the status of the National School Nutrition Plan (NSNP). Reports of unhygienic handling of food placed a considerable risk to learners. In terms of financial management at schools, he noted that the AGSA had reported “no findings” for six provinces for the submission of annual financial statements. Was there no deviation in schools in these provinces? What is being compared? He inquired as to the methodology used by the AGSA in producing these findings? Were the samples very small? Lastly, in terms of the TVET colleges, did the AGSA produce a consolidated report on these findings?

Ms P Samka (ANC, Eastern Cape) raised concern over the inconsistencies reported by the AGSA. She stated that it appeared as though contractors – the implementing agents – are getting paid by the provincial departments without any quality assurances. She stressed the need for the departments to inspect the work done before the implementing agent is compensated, particularly if tenders are being allocated to “friends”. The uneven supply of LTSM was a serious concern, possibly pointing at the malfunctioning of DBE. She stressed the need to strengthen monitoring and evaluation processes across all provincial departments. She inquired as to the progress made on improving the mud schools in the Eastern Cape. How much has been achieved in this regard? She wanted to know whether the current system of Teacher Professional Development was regressing or moving forward, considering the ease in which these reports are being falsified. Are the Integrated Quality Management System (IQMS) reports being plagiarised? The lack of skills and budgetary constraints presented serious challenges for DBE. What reasons was the Department giving for these shortfalls? The policies and processes within the sector need to be made more effective.

The Chairperson noted that the Committee was running out of time for the session. She asked who defines the scope of reference for the auditing in each section. In terms of the LTSM, does this categorisation pertain to stationary in general or textbooks exclusively? She noted that the session would be more effective if other provincial representatives were present to account for the findings. Considering the huge human resource potential of the AGSA, would the statistics presented be updated incrementally, perhaps on an annual basis? With reference to the poor construction work done in education infrastructure, she stated that there was a risk that these structures were not fit for human use. She asked why some contractors were still paid and if the Department of Higher Education and Training was in the process of changing the SETA landscape considering the challenges mentioned in the AGSA presentation. She requested an account of what the SETAs were doing as aggregate information on provinces is not sufficient in this regard. She also requested that the AGSA report on the training of School Management Teams (SMTs) and school governing bodies within the next two weeks.

Responses

Mr Wheeler reminded the Committee that the mandate of the AGSA is defined in the Public Audit Act of 2004. In terms of the Act, the AGSA receives no appropriation from government, however departments are charged for the audit for agreed-upon costs. He noted that limited capacity was a serious constraint for the AGSA. The majority of the AGSA’s work consisted of regulatory and financial auditing. After analysing financial statements and trying to support transactions, an audit opinion is formed based on the work done. The AGSA was not limited to financial auditing, but also compliance-based auditing as per the Public Finance Management Act (PFMA). In terms of performance information, the AGSA analyses where departments link budgets with objectives. A “clean audit” was indicative of financial statements having no major faults and general compliance. An opinion of “qualified with findings”, contrastingly, is indicative of problems within the entity under question. The AGSA produces annual reports on government departments, however the 2015/16 Education Sector Report was not one such report, and was thus structured differently. In this regard, he stated that the AGSA had discretion on the focus areas of the Education Sector Report, based on the areas that the AGSA could make a difference. The AGSA was not a government entity, but rather a Chapter 9 institution, with only the power to report.

Mr de Haan responded and said the auditing process was not a one-sided exercise, as the AGSA actively discussed its concerns with the Director-General and HODs of the entity undergoing the audit every two years. He stated that for the current year, the AGSA’s primary focus areas were infrastructure, school governance and functioning according to SASA. Within the school governance focus area, the AGSA considered issues pertaining to LTSM and Teacher Professional Development. A major issue pertaining to school governance was whether school principals are aware of their responsibilities in terms of SASA. Another area of focus was the Early Child Development (ECD) with regards to the success rate of individuals finalising their schooling. In terms of the sample size of the 2015/16 report, the sample consisted of around 20 schools per province within the specific focus areas.

In terms of infrastructure, Mr de Haan stated that the lack of skills in DBE remains a primary concern, considering the prominent role of implementing agents. These agents are not sufficiently managed, resulting in inflated costs and poor quality work. He stated that the Director-General of DBE had developed a Projects Unit consisting of qualified engineers, quantity surveyors and accountants to manage the work of implementing agents. Some projects had not been managed for up to five years, and some implementing agents were responsible for the construction of around 10-20 schools. With this considered, he stated that it was difficult to do costing per school, as provincial departments will not accept asset values that are considered unreliable.

After the AGSA visited schools in the Mpumalanga province, it was revealed that some schools had not yet been transferred to the provincial department due to the fact that the administration from DBE had not yet been finalised. For this reason, the schools were unable to budget for maintenance of infrastructure. He stated that 900 schools constructed since the implementation of ASIDI in 2011, many of which were occupied by learners, but have not yet been transferred to the provincial departments. In terms of ASIDI’s Annual Performance Plan (APP), 190 schools were to be transferred to provincial education departments; however the actual figure of successful transfers was 10. Mr This reveals a worrying disjuncture between financial spending and performance.

Addressing the question relating to the scope of sampling for the performance of the ASIDI programme, Mr de Haan replied that the provinces were selected on the basis of a risk assessment and resource capacity. The ASIDI project came into effect, because National Treasury felt that schools were not being constructed quickly enough. With regards to Ms Dlamini’s reference to the performance report on schools in the Western Cape, Mr de Haan stated that he was not aware of the report, but requested the report from Ms Dlamini upon the conclusion of the meeting. On the recommendation on SETAs, he said the AGSA had identified a deficiency of sector skills plans, which should inform the APP. The sector skills plans should be compiled through a needs assessment research; however this was not generally the prevailing practice. The SETA programmes must be identifiable through the South African Qualifications Authority (SAQA) National Qualifications Framework (NQF) in order to substantively improve the employment prospects of learners. 

Addressing the question on poor government planning, Mr de Haan stated that he would have to agree with the statement, considering the ripple effect the policy and control deficiencies had on infrastructure projects. Some projects had been delayed up to 24 months, and the majority of projects were running up to 20% over budget. There are currently no systems in place to effectively hold implementing agents accountable for sub-standard work. Addressing the question on mud schools in the Eastern Cape, he replied that mud schools were looked at as part of the AGSA’s review of infrastructure in the province. He made reference to the adopt-a-school programme where community members take on the task of building schools themselves without implementing agents or contractors. There were only three of four of such projects and the AGSA had identified many deficiencies in the construction process.

Addressing Ms Samka’s question regarding the IQMS system, Dr. Rambau stated that the AGSA conducted an audit in 2014/15 where the focus was on how information was captured in the IQMS system. Because the IQMS system is linked with remuneration, the information was usually unreliable, as teachers would often give themselves high scores so as to indicate they did not require training. The AGSA had brought this finding to DBE who indicated that they were in the process of detaching the training-needs system with teacher appraisals. One of the major challenges was the compliance-driven method currently being used in school improvement plans, where the only difference in the three-year plan was the year, while the rest of the information remains the same.

The Chairperson thanked the AGSA. In terms of the policy gaps identified by the AGSA, she noted that the ruling party will be conducting a policy conference soon. It was likely that the ruling party would develop resolutions in terms of addressing these issues, which will subsequently become government programmes. This will be not be the Committee’s last engagement with the AGSA on the topic.

The meeting was adjourned.